A talented Sporting Lisbon forward, Ronaldo had just started his rise to top class football when he went close to signing for Liverpool.
But things did not go as planned. Houllier, who was the manager at Anfield between 1998 and 2004, revealed that he scouted teenage Ronaldo in 2003.
This was prior to Ronaldo coming to the attention of Manchester United manager Sir Alex Ferguson.
He said: "I saw him in the Toulon Under-21 tournament and we went for him, but we had a wage scale and we weren't paying the sort of salary he wanted.
"Then Manchester United played a friendly against Sporting Lisbon and all their boys said to Sir Alex Ferguson, 'You have to sign him'.
"But I agreed with not breaking the wage structure. I thought it would cause problems in our dressing room."
The French boss saw one of the greatest football players in history slip through his fingers, and only realised what he had lost when it was too late.
In the 2003/04 season, his Liverpool came fourth in the Premier League and saw Ronaldo leading Ferguson's Red Devils to the third place and to the FA Cup title.
"I know some of the signings were not as sharp as they could have been," he added.
"Maybe we would have won the title with Ronaldo, but we had Harry Kewell, who was outstanding at the time and was very hungry but got a bad injury.
"After that, he never had the same confidence, the same appetite."
With Cristiano Ronaldo in their ranks, United won three Premier League titles, one FA Cup and one Champions League trophy.
